John Magufuli

LONDON/BENGALURU – Acacia Mining said on Friday it would cost about $30-million to put its Bulyanhulu mine in Tanzania under care and maintenance as an export ban on the miner’s metals weighed.

Shares in the unit of Barrick Gold rose 4.7% after the company stuck to its full-year production guidance despite the ban.

Acacia is losing $15-million per month after Tanzania banned the export of all unprocessed ore in March, forcing the company to make contingency plans in case a resolution is not found.

Chief Executive Brad Gordon told a conference call on Friday it would cost $30-million to shut Bulyanhulu mine for layoffs and breaking contracts and between $2-million to $3-million per month in care and maintenance charges.

Tanzanian President John Magufuli fired his mining minister and the chief of the state-run mineral audit agency last week after an investigation into possible undeclared exports by mining companies, including Acacia, to evade tax.

A second audit of Acacia is now under way after the first audit committee last week said it found Acacia had 10 times more gold in its containers than the company had declared, as well as undeclared minerals such as iron and sulphur.

Acacia has denied any wrongdoing and said it still has not seen the report.

“If we get to a point following the release of the second report where we see an impasse in dialogue with the government then we would put Bulyanhulu on care and maintenance,” Gordon said, adding that the burn on cash could also be a trigger.

The ban mainly affects the Bulyanhulu mine which is a larger, newer mine that has higher running costs. Buzwagi mine is nearing the end of its life.

It said production for the year would still fall between 850 000 oz to 900 000 oz.

Acacia, which is also listed in Tanzania, said its cash at the end of May was $165-million.

Gordon said he was accompanied this week by Acacia chairperson and Barrick president Kelvin Dushnisky on a trip to Tanzania in an effort to resolve the ban.